Which Market Is Most Important To Jardine Cycle & Carriage Ltd?

In 2015, Jardine Cycle and Carriage Ltd (SGX: C07) reported a 20% decline in underlying profit to shareholders from US$793 million in 2014 to US$638 million.

The company’s 50.1%-owned subsidiary, the Indonesia-listed Astra International, was a major contributor to the overall decline in profit; Astra’s underlying profit contribution had dropped by 34% to US$477 million. Jardine Cycle & Carriage’s direct motor interests, meanwhile, had helped offset some of Astra’s decline with a 71% increase to US$141.1 million.

Jardine Cycle & Carriage has direct motor interests in five countries, namely, Vietnam, Singapore, Indonesia, Malaysia, and Myanmar. I want to zoom in on the performance of the direct motor interests in these five countries.

Source: Jardine Cycle and Carriage 2015 Annual Report

Jardine Cycle & Carriage’s direct motor interest in Vietnam is represented by Truong Hai Auto Corporation. It is one of the major players there and distributes vehicle brands such as Kia, Mazda, Peugeot, Foton and Hyundai. Vietnam is currently the leading contributor to the underlying profit of Jardine Cycle & Carriage’s direct motor interests.

In Singapore, Jardine Cycle & Carriage distributes motor vehicles and provides after sales service for Mercedes-Benz, Mitsubishi, Kia and Citroën under the Cycle & Carriage distributorship.

The company’s Indonesian direct motor interest is known as Tunas Ridean, which provides rental and fleet management in addition to a traditional distributorship business. It also provides financing to vehicle owners and is listed in Indonesia as well.

A Foolish conclusion  

As you can see, Vietnam is the largest market when it comes to Jardine Cycle and Carriage’s direct motor interests. Singapore comes in second.

If there are any adverse incidents such as flooding in Vietnam or sharp increases in Certificate of Entitlement (COE) prices in Singapore, then investors may want to worry about the direct motor interests portion of Jardine Cycle & Carriage’s business. But, if there are difficult conditions in Myanmar, the scope for worry is a lot lower given that the country represents a tiny portion of the company’s direct motor interests.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat does not own shares in any companies mentioned.